Congressional Attack on ESG Fails to Acknowledge Climate Change Threat to Financial Systems

The U.S. Senate and House of Representatives both passed a resolution this week nullifying a Labor Department rule that allows money managers to weigh climate change and other environmental, social and governance (ESG) factors when making investment decisions. The resolution now heads to President Biden’s desk for a veto.

Below is a statement by Dr. Rachel Cleetus, policy director in the Climate and Energy Program and lead economist at the Union of Concerned Scientists.

“It is widely accepted in the investment community that factors like worsening climate impacts pose a significant risk to our financial and economic systems and taking that reality into account is simply good fiduciary practice. As billion-dollar extreme weather and climate-related disasters mount, it is commonsense to align responsible investment choices with what science shows is necessary to limit risks to people and the economy. Moreover, climate-conscious investing will also best serve the interests of people whose retirement accounts and other investments would otherwise face exposure to climate risks. Attacks on ESG principles have deep roots in the fossil fuel industry and are aimed at trying to ensure coal, oil and gas companies can continue expanding production of their climate-destroying products at the expense of the public. President Biden must move quickly to veto this resolution, as he has promised to do. That would affirm what scientists, economists, and forward-looking asset managers know to be true: climate change is a serious risk to our economy and acknowledging that fact is the first step to making better choices to protect people’s futures and livelihoods.”